Available equity is not simply your property value minus your mortgage. A lender also considers the maximum loan-to-value it is prepared to accept, existing secured balances, property type and location, mortgage position, fees, and how the new loan will be repaid.
The short answer
Available equity is not simply your property value minus your mortgage. A lender also considers the maximum loan-to-value it is prepared to accept, existing secured balances, property type and location, mortgage position, fees, and how the new loan will be repaid.
A useful first estimate is: property value × assumed maximum LTV − existing secured debts − transaction costs. The final amount depends on an appraisal and lender approval.
What changes the amount available?
Private and alternative lenders do not all use the same limit. A marketable owner-occupied home in the GTA may be assessed differently from a rural, commercial, mixed-use or construction property.
- Property location, type and condition
- First or second mortgage position
- Current mortgage, HELOC and property-tax balances
- Credit, income and payment history
- Requested term and proposed exit strategy
Gross approval is not net cash
The amount registered as a mortgage can be higher than the cash delivered to you. Lender, brokerage, legal, appraisal, discharge and interest-reserve costs may be deducted. Always compare net proceeds, total term cost and principal due at maturity—not only the advertised rate.